Bush and Blair stand united over Iraq, but on one particularly sensitive domestic issue they are worlds apart. We investigate the impact of Republican and Labour policies on housebuilding either side of the pond
“I appreciate being with the homebuilders from all across the country – it’s a good way to spend a Saturday morning,” said the lovestruck president to his adoring audience. “You are leading the economic recovery. You represent the great entrepreneurial spirit of America … You know, my grandfather built a house in this city?”
“Four more years! Four more years!” replied the National Association of Home Builders, gathered at the Great Columbus Convention Centre in Columbus, Ohio, at the beginning of this month to listen to George W Bush’s views on the noble mission to create democracy in Iraq, the resurgent economy, and why he should be re-elected.
Ten days later, another political leader facing impending re-election walked to a podium to deliver his thoughts on housebuilding. There was no folksy downhome Texan charm here, though; Tony Blair was at the University of London to give the industry a bit of a talking-to.
He called for the housebuilders to do more to meet the government’s targets for housing supply in the South-east. Deputy prime minister John Prescott and housing minister Keith Hill have also made speeches this autumn urging the industry to build these houses more cheaply.
When you have regulations that send confusing signals, it's time to reduce those regulations
President George W Bush
These calls for housebuilders to raise their game were particularly hurtful for the British industry, as they coincided with a European Union directive that calls on developers to follow EU procurement rules on social housing projects, and proposed changes to PPG3 that would give local authorities powers to dictate the size, type and affordability of developments containing more than 15 dwellings.
Then, for good measure, they got a rap on the knuckles for the quality of their design by government watchdog CABE. Given such pressure, Blair is unlikely to be given a warm, American-style welcome from any HBF members he may address in the run-up to next year’s general election.
Of course the situations are not exactly comparable: for one thing, planning policy is not set by the federal government, and the NAHB is an altogether more muscular body that the HBF – it has a membership of 215,000, compared with our federation’s 400 – so it wields considerable power to lobby for the interests of American housebuilders. An NAHB spokesperson stresses that the body, despite the chants in support of Bush, is politically bipartisan. “It’s true that our traditional allies on a lot of issues such as taxes and regulation are the Republicans,” she says. “But on issues such as affordable housing and housing programmes, our allies have been the Democrats.” The body launched an advertising campaign aimed at both the Democratic and Republican conventions over the summer in its drive to elevate housing as “a national priority” – and of the two former presidents of the NAHB, one was a “fervent” Republican whereas the other was a Democrat.
That said, there are many similarities between Bush and Blair, which were brought out by the content of the president’s speech to the NAHB. Bush is on a Thatcherite mission to increase home ownership and has set ambitious target for the supply of affordable and key-worker housing (see “Over here and over there”, above). This is set against his presidential opponent, John Kerry, who is advocating the provision of decent and affordable rental housing for low-paid workers.
The way Bush is pitching his plans to the housing industry in the States would leave housebuilders this side of the pond purring. As well as setting out tax credits and breaks for housebuilders to build low-cost housing, and encouraging more low-income Americans to take out a mortgage, Bush reckons reducing government regulation would cut 35% from the cost of new homes. “I understand there’s a need for sensible regulation, but when you have overlapping regulations that send confusing signals, when you have the federal government, the state government, the local governments creating obstacles for homebuilding, it is time to reduce those regulations.” Given the opportunity, perhaps Britain’s housebuilders would vote to formalise their country’s status as the 51st state?
Over here and over there: Housebuilding targets in the UK and USA
The UK market
1.25 million home loans in 2003
29% of buyers are first-time buyers
10% of buyers buy new-build
146,000 homes built last year
Home ownership is just below 80%
Kate Barker advocates building more than 200,000 homes a year to 2011
The UK needs at least 38,000 affordable and social homes a year over the next decade
The UK government's strategy to increase low-cost homes access includes:
- A £1bn investment in key-worker housing provided by housing associations for sale and rent
- Giving English Partnerships the remit to ensure public land released for development is planned as sustainable communities with affordable houses
The US market
6.5 million homebuyers annually
40% of buyers are first-time buyers
28% of buyers buy new-build
1.8 million homes built last year
Home ownership has reached 68%
The US needs 18 million new homes over the next decade
The current administration's goal is to build
7 million affordable homes within a decade
President Bush's strategy to increase low-cost home ownership includes:
- The Homeownership Tax Credit. This gives tax credits to developers who build or rehabilitate housing in underserved neighbourhoods for low-income buyers, and is expected to prompt the construction or renovation of up to 50,000 homes a year
- The FHA Zero Down Payment programme. This would remove the 3% down payment for first-time homebuyers with FHA-insured loans
- A request for $2.7bn in loan guarantees and $1.1bn for direct loans to low-income borrowers who can't get bank loans
What Bush told the housebuilders
"For millions of our citizens, the American dream starts with owning a home."
"Home ownership gives people a sense of pride and independence and confidence for the future ... We're creating a home ownership society in this country, where more Americans than ever will be able to open up their door and say, welcome to my house, welcome to my piece of property."
"We've doubled funding for education and counselling services to help first-time homebuyers navigate the lending process. Home ownership rates are at an all-time high in America, nearly 70%. I love that statistic."
"I want to thank you very much for what you're doing. I want to thank you for helping pull our economy through some tough times and helping this nation get on that hopeful path for a bright future. I appreciate your hard work, I appreciate your optimism, I appreciate your love for America."
["FOUR MORE YEARS! FOUR MORE YEARS!" etc]